Los Angeles, California – Dollar stores across the United States are facing closures, with 99 Cents Only Stores announcing the shutdown of all 371 locations. This decision follows the news that nearly 600 Family Dollar stores are set to close this year, adding to the 400 more stores under the Family Dollar and Dollar Tree banners that are set to close in the future as leases expire.
Kennedy Smith, a senior researcher for the Institute for Local Self-Reliance, expressed concerns over the recent closures, highlighting the challenges faced by dollar stores. Despite the closures, experts believe that this does not signify the end of the dollar store format, citing various factors to support ongoing operations.
The growth of dollar stores in the past decade has been substantial, with companies like Dollar General and Dollar Tree expanding their presence. However, changing economic conditions, including inflation, reduced government benefits, and inventory losses, have impacted the industry. Dollar Tree CEO Rick Dreiling described the current environment as “very challenging.”
Issues of mismanagement have also plagued some dollar stores, with violations cited by the Occupational Safety and Health Administration (OSHA) resulting in penalties. In addition, in February, Family Dollar faced a penalty for storing products in a rat-infested warehouse.
The closures of stores by 99 Cents Only reflect a necessary adjustment in response to challenges faced by the company. Brett Hollenbeck, an associate professor at UCLA Anderson School of Management, suggested that the size of 99 Cents Only compared to its competitors could be a factor in its struggles.
Contrastingly, Dollar General’s strategic focus on rural locations has positioned the company favorably for growth, with plans to open more stores in such areas. The emphasis on logistics and store condition sets Dollar General apart, signaling its resilience in the changing landscape of the dollar store industry.
While some communities welcome the closures of dollar stores, citing concerns over limited access to healthy food options, others continue to resist the expansion of these stores. The debate over the impact of dollar stores on local economies and community well-being continues as closures and expansions shape the future of the industry.